Brokerage Stocks: Go Long

For the first time since it went public in 1994, Lehman Brothers has posted a quarterly loss. But Morningstar's Ryan Lentell doesn't want that to sour you on buying brokerage shares.

"Short-term, you're not going to be doubling your money," he admitted to CNBC. "They're an investment that you're going to be holding for a long period of time."

But what about their current woes?

"If you revert back six years, you had the same arguments going on," he said. "It ended up being a tremendous buying opportunity; I think you're going to have these periods, time after time, with the investment banks."


What of perennial favorite Goldman Sachs?

"Long-term...Goldman's probably the best set-up firm," he said. "It's the most pricey, and the market realizes that...I think it's undervalued today, but I think you can get some better values in some of its competitors."

Competitors such as Morgan Stanley and Merrill Lynch.

"I think they're both at a little bit greater discount to their fair values than I would put Goldman," he said.

  • Learn more: Watch the entire Lentell interview (3 mins, 47 secs)


Neither Lentell, his family, nor his firm own any shares of, or have business relationships with, Goldman Sachs, Morgan Stanley, or Merrill Lynch.